What this means is that if you like local varieties you need to get on the net and stream. There's lots of college, public and commercial radio that streams as well as kick ass podcasts. But because of a struggle over how much digital radio and other digital deliverers should pay for play, we may have a real problem on our hands. The Copyright Royalty Board has held a number of proceedings on webcasting rates and terms , as Idolator notes
The board decided to go with the rate suggestions put forth by SoundExchange*, the division of the RIAA focused on collecting digital royalties, and not broadcasters; perhaps unsurprisingly, they're prohibitively expensive for even the largest broadcasters, and in some cases the required royalty payments may equal or exceed 100% of an Internet radio station's revenue.Kurt Hansen explains
Because a typical Internet radio station plays about 16 songs an hour, that's a royalty obligation in 2006 of about 1.28 cents per listener-hour.Ok, so for every dollar I take in, you get a dollar. Hmmm? Profit anyone?
In 2006, a well-run Internet radio station might have been able to sell two radio spots an hour at a $3 net CPM (cost-per-thousand), which would add up to .6 cents per listener-hour.
Even adding in ancillary revenues from occasional video gateway ads, banner ads on the website, and so forth, total revenues per listener-hour would only be in the 1.0 to 1.2 cents per listener-hour range.
That math suggests that the royalty rate decision — for the performance alone, not even including composers' royalties! — is in the in the ballpark of 100% or more of total revenues.
Ok, so if this is the case then this is completely unreasonable, which isn't to say it will somehow be dealt with in the future. Here's the reason why. This fight isn't about your small webcaster. Rather it is about how much XM or Sirius will pay to play. And the law being what it is, the consequences could be devastating to the little guy. If you want to see who was involved in this fight you can click here, here and here. I have only skimmed the surface here, but this is interesting to say the least. Basically what you have is "new means of distribution" meets "established organization with lots of clout", something we have seen seen before, When, you ask? Why, thanks for the question. Allow me to explain.. ahem...
Back in the old days of the US there was this old timey medium called broadcasting they wanted to use popular music on their airwaves. The big problem was that the most popular music was controlled by ASCAP, who had the rights to the best songs and wanted these broadcasters to pay through the nose to play them. ASCAP had the clout and the broadcasters did. Furthermore, ASCAP was notoriously picky about who got to join closed the door on many aspirant songwriters who they viewed as unskilled, unwashed and undesirable. The broadcasters looked at this option and decided to build a new organization that "opened the door" for these artists and the result was, you guessed it, BMI:
BMI was founded by radio executives to provide competition in the field of performing rights, to assure royalty payments to writers and publishers of music not represented by the existing performing right organization and to provide an alternative source of licensing for all music users.Ok, so this took about 17 years to happen, so don't expect new digital distribution organizations to get their act together anytime soon. And, yes, I do have suggestions on how to get their act together and with whom they should work with (and invest). Right now I would say that the terms Long Tail, EFF and Creative Commons could all be substantial keys. Let's just say that developing organizations that cultivate a new labor force and new contractual understandings will be key. Much in the same way that BMI was the key to getting hillbilly music on the air and those artists gaining some wealth as a result, I would hope that some people are out there beating similar bushes so that we still have an option to Clear Channel sanctioned radio and the artists who exists in those formats.
BMI’s history coincides with one of the most vibrant, evolving and challenging periods in music history. As popular music has moved from big-band to rock & roll and hip-hop, and formats have evolved from 78 and 33 1/3-rpm vinyl records to compact discs, MP3s and beyond, BMI has worked on behalf of its members to maintain a leadership position not only in the United States, but worldwide.
Underlying everything BMI does is its philosophy: an open-door policy that welcomes songwriters, composers and music publishers of all disciplines, and helps them develop both the creative and business skills crucial to a career in music.
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